Thursday, January 31, 2008

the Chinese Brand

i’ve been mulling the post about arrogance. And noticed three things in the meanwhile.

1. the elevator is English. she announces ‘going up'.... and 'the 17th Floor’ in a singsongy english voice. she doesn’t even pretend to speak Chinese.

2. Starbucks a couple blocks from my hotel is excellent. for real. The espresso is better. The croissant is much better.

Better than what? the average starbucks in the states. The butter croissant may be on the List. And there’s more. Yesterday I got a raisin scone and it was memorable (....a memorable scone....)

3. The process sheets (work order traveler that follows a part as it’s manufactured) were written in english. Imagine a credit card application written in Chinese.... this is what it must look like to the workers._________________________

There is obviously an intersection of culture in Shanghai, resulting in a whole lot of commerce: The Chinese must live with western brands and products whether they like it or not.

Can you imagine going to new york, staying at the Hilton, getting in the elevator and it talking to you in Chinese and NOT English? ...... maybe every elevator worldwide is restricted to English. I’ve never noticed... and I guess that’s the point....

Also it appears that the Western Brands are making a real go of it. Staples, Starbucks, Audi; the presentation of these companies is impressive -- with Staples it’s the advertising and size of the store, with Starbucks the quality of the food and service, and with Audi -- well you should see the flipping show room.

Circle back to the comment about arrogance. I suspect that the psychology must in some way be rooted in a desire to see Chinese brands simply be as successful as the Western brands that are so IN YOUR FACE in this city--

But perhaps another issue is looming. If a Chinese factory’s primary business model becomes developing it’s own brand it will necessarily subordinate a ‘sourcing’ customer to the demands of the Brand. If a factory capable of making 90 million socks is developing its own brand, then the relationship with Hanes or whomever will have to change.

Moreover with an incentive to sell product under it’s name and an outlet for direct sales (of quantity) it will face a pretty significant temptation to ‘leverage’ technology and design trusted to it for production.

So what’s different between this and the Knock Offs.... everything. We talk about buying $10 Gucci bag on the streets of New York not a Chinese Brand of bags that’s as good as Gucci. The ridiculous handbag industry is worth another whole essay.... suffice to say that Gucci and everyone else in that industry makes bags in China. Right now all they face is a copy of their bag being sold as a fake gucci bag. But what if that Gucci factory had the brand power of Kate Spade.

To draw a clearer example. If Boeing were to make a plane at a Airbus facility. The conflict is self evident and really doesn’t need more explanation.

There is an intersection of commerce here. If China is intent on evolving from the sourcing model to the establishment of worldwide Brands it may open the door to a whole lot of second guessing from folks who have for 20 years poured money into the country to get their goods manufactured.